How Do Firm Characteristics Influence the Relationship between R&D and Firm Value?

This paper focuses on how a firm's characteristics affect the market valuation of its research and development (R&D) spending. We derive a valuation model based on the capital market arbitrage condition. Using the generalized method of moments and data from the Eurozone countries to estimate this model yields interesting results. Several firm characteristics (size, firm growth, and market share) positively affect the relationship between firm value and R&D spending, while others (free cash flow, dependence on external finance, labor intensity, and capital intensity) exert a negative effect. Therefore, we conclude that the effectiveness of R&D spending depends on firm characteristics.     

Estimating financial distress likelihood

This study develops an ex-ante model for estimating financial distress likelihood (FDL), and contributes to the literature by presenting a financially-based definition of distress that is independent of its legal consequences, a theoretically supported model for the FDL, and an appropriate methodology that uses panel data to eliminate the unobservable heterogeneity. The model is then estimated cross-sectionally to obtain an indicator of the likelihood of financial distress that incorporates the specificity of each company. In doing so, this study provides a well-specified model that is stable in terms of magnitude, sign and significance of the coefficients and, more importantly, that yields a measure of the FDL that is more robust to time and the international context than the estimates of FDL that are based on seminal models. This measure could be appropriate for use in future research that deals with FDL, such as capital structure and the prevention of financial distress.     

The disposition effect and investor experience

We examine whether investing experience can dampen the disposition effect, that is, the fact that investors seem to hold on to their losing stocks to a greater extent than they hold on to their winning stocks. To do so, we devise a computer program that simulates the stock market. We use the program in an experiment with two groups of subjects, namely experienced investors and undergraduate students (the inexperienced investors). As a control procedure, we consider random trade decisions made by robot subjects. We find that though both human subjects show the disposition effect, the more experienced investors are less affected.     

Does firm heterogeneity lead to differences in relative executive compensation?

Cost heterogeneity is an important source of performance disparity among firms. This heterogeneity conditions the strategic decisions that firms make in the product market and can lead to heterogeneity in the design of managerial compensation contracts. I investigate the effect of cost heterogeneity in a strategic product market environment where firms compete à la Cournot. The paper offers new predictions on how executive compensation contracts that account for relative performance must be adjusted for cost differences.     

Supply and quality choices in private child care markets: Evidence from São Paulo

Many developing countries have adopted the market approach for expanding the supply of child care, but little is known about the economic behavior of independent providers. Drawing on uniquely rich census data on child care providers from São Paulo, we document three main facts: (1) the stock of private suppliers is considerably larger in high-income city districts; (2) the quality of private provision – as measured by teachers' schooling, group size and equipment – is highly heterogeneous across space and increases systematically with local household income; and (3) a considerable share of centers operates below recommended (but not regulated) quality standards, especially in low-income districts. These findings are consistent with a model of endogenous entry and quality choices by heterogeneous providers. Market-driven heterogeneity in the quality of provision across space is an important consideration for the design of regulations in child care markets.     

MACROECONOMIC LINKAGES IN MEXICO

The authors study the effects of selected macro variables on output in Mexico, following a Kaleckian framework, and using a probabilistic approach to econometrics. They find a strong positive effect of US GDP, of protection of the domestic market and of government expenditure, on Mexico's GDP, and a negative influence of higher exchange rate and credit rationing. Their results support the overall outlook proposed by the post Keynesian and the Latin American Structuralist schools of economic thought, and reject the Washington Consensus type of policies Mexico has been following during the last decades.     

Does Family and Lone Founder Involvement Lead to Similar Indebtedness?

This study evaluates whether the presence of a lone founder and family involvement impact private firms’ leverage differently from a methodological view. Using a sample of 4,102 private firms in Spain and taking under consideration a panel data structure from 2006 to 2013, we find that lone founder and family involvement matter in capital structure decisions and size shapes the forementioned influence. Our findings show that lone founder involvement always implies higher debt than the rest of firms and suggest that firms with genuine family involvement are significantly low debt companies.     

Customer behavior in electronic commerce: The moderating effect of e-purchasing experience

This study analyzes the perceptions which induce customers to purchase over the Internet, testing the moderating effect of e-purchasing experience. We distinguish between two groups: (1) potential e-customers, who are considering making their first e-purchase, and (2) experienced e-customers, who have made at least one e-purchase and are thinking about continuing to do so. The perceptions that induce individuals to purchase online for the first time may not be the same as those that produce repurchasing behavior. Our findings demonstrate that customer behavior does not remain stable because the experience acquired from past e-purchases means that perceptions evolve. The relationships between perceptions of e-commerce change with purchasing experience, whilst the influence of Internet experience is stable for all users. The implications are especially interesting for e-commerce providers whose business models depend on e-customer behavior.     

Factors influencing producers' perceptions about the importance of government support programmes in agriculture: application of a semi-parametric ordered response model

This article examines factors affecting producers’ perceptions towards the relative importance of government support programmes in agriculture. Specific attention is placed on determining the effect of crop insurance usage on farmers’ views about the importance of government programme payments. Results from a semi-parametric ordered response model shows that producers who use yield- or revenue-based crop insurance products also tend to view government programmes with higher importance, suggesting that crop insurance and direct government support programmes tend to be complements rather than substitutes.